Anti-Money Laundering (AML)

Anti-Money Laundering (AML) is the legal framework requiring letting agents to verify client identities and report suspicious activities under the Money Laundering Regulations 2017. HMRC supervises approximately 25,000 estate and letting agents for AML compliance in the UK. Agents must conduct Customer Due Diligence on landlords, maintain records for 5 years, and submit Suspicious Activity Reports (SARs) when required. Non-compliance can result in unlimited fines and up to 2 years' imprisonment.

Who Needs to Comply?

All letting agents who act as intermediaries must comply with AML regulations when:

• Finding tenants for landlords
• Collecting rent on behalf of landlords
• Managing properties
• Handling client money

Key AML Requirements

Customer Due Diligence (CDD)

You must verify the identity of:

• Landlords (the beneficial owner of the property)
• Anyone acting on behalf of the landlord
• In some cases, tenants

What to Check

• Identity: Passport, driving licence, or other government-issued ID
• Address: Utility bill, bank statement (less than 3 months old)
• Source of funds: Where the money comes from (for large transactions)
• Politically Exposed Persons (PEPs): Enhanced checks required

Record Keeping

• Keep copies of all ID documents
• Record what checks were done and when
• Retain records for 5 years after the relationship ends

Suspicious Activity Reports (SARs)

You must report to the National Crime Agency if you suspect:

• Money laundering
• Terrorist financing
• Other criminal activity

Penalties for Non-Compliance

Failing to comply with AML regulations can result in:

• Criminal prosecution
• Unlimited fines
• Imprisonment (up to 2 years)
• Being banned from the industry

For Letting Agents

AML compliance should be part of your standard onboarding process:

• Verify all new landlord clients before taking on property
• Use electronic verification services where appropriate
• Train staff to recognise suspicious activity
• Maintain detailed records of all checks